The billionaire’s acquisition of Twitter risks harming his much bigger interests
was announced on April 25th. Mr Musk agreed to pay $54.20 per share . This week Twitter’s shares have been trading as low as $37.
Not only may Mr Musk fear overpaying. The acquisition also risks harming his much bigger interests. Tesla, his electric-car company and source of most of his wealth, has lost 29% of its market value—$305bn—since the Twitter plan was hatched. Investors worry that the social network could prove a distraction for Mr Musk, who has indicated that he may serve as its interim chief executive. It could also harm Tesla’s business in China, where Twitter is banned.
Twitter’s board says it intends to enforce the acquisition agreement. But it is in a tight spot. Compelling Mr Musk to make good on his offer would mean months in court, with no guarantee of success. There is no obvious alternative buyer. If the deal falls through, Twitter’s share price will drop below $30, thinks Mr Ives, who believes Mr Musk hopes to use this leverage to negotiate a lower price. Unlike with his tweets, the billionaire may yet be able to edit his contract.
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